VAT Case Study

The Client’s Request

With HMRC becoming increasingly aggressive in challenging businesses’ VAT arrangements, receiving a hefty VAT bill is an ever increasing occurrence and is something every company wishes to avoid especially when it is unexpected. So, when a Midlands based restaurant received a VAT bill demanding of £75,000 from HMRC after two members of their four person partnership left the firm and they deregistered for VAT, they got in touch with us for help.

As the company had a VAT-able property, legally VAT was required to be paid on any assets including property that is subject to an option to tax, which is what resulted in this hefty bill. The client approached us to resolve the situation with the hope that the bill be reduced.

How we helped them

We coordinated with various divisions within HMRC on the clients’ behalf to implement a strategy whereby the option to tax still applied for legal reasons; however a new registration was opened for the remaining partners backdated to when the other members deregistered. We were then able to get HMRC’s compliance unit to accept that there had been continuous VAT registration albeit with two different registration numbers. We took the pressure and hassle away from the client to liaise with HMRC and we were able to use our expertise to think creatively and formulate an effective solution to their problem, in line with HMRC policy.

James and Sue, the remaining partners commented:

“We were threatened with a large VAT assessment and had initially tried to deal with HMRC ourselves. However, we came across a brick wall at HMRC and recognised that we needed help. We asked for Smith Cooper’s assistance and as a result of Tony Bartle’s intervention, HMRC withdrew their assessment. Tony clearly demonstrated his technical VAT knowledge and pragmatic skills in dealing with HMRC and secured a very successful outcome. We have no hesitation in recommending Smith Cooper’s VAT services if you are faced with a similar issue.”

James & Sue, the remaining partners

The Result

After much discussion with HMRC, we successfully persuaded them to retract their demand for £75,000 despite the fact it could have been enforced on a technicality. Our persistence, alongside our ability to negotiate and devise an effective strategy ensured that we achieved the best result for the client, saving them a considerable amount of money.